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Current Rate of Return Guidelines

The Rate of Return Guidelines sets out the ERA's approach under the National Gas Rules for determining the rate of return for gas transmission pipelines and distribution networks. The 2013 guideline is the first to be produced by the ERA.

These guidelines are currently under review. The National Gas Rules require the ERA to review these guidelines periodically. The ERA intends to publish a draft of the updated rate of return guidelines in November 2017. This will be followed by a public consultation period.  The ERA plans to publish the final updated rate of return guidelines in the first half of 2018. Information about this review is available here.

Rate of Return Guidelines

Papers

Public Submissions

Date Documents File type
19-Nov-13
Public submission - development of the Rate of Return Guidelines - Alinta Energy
Adobe PDF 278 kB
19-Nov-13
Public submission - development of the Rate of Return Guidelines - GGT
Adobe PDF 3 MB
19-Nov-13
Public submission - development of the Rate of Return Guidelines - Water Corporation
Adobe PDF 125 kB
19-Nov-13
Public submission - development of the Rate of Return Guidelines - Wesfarmers Chemicals, Energy & Fertilisers
Adobe PDF 173 kB
19-Nov-13
Public submission - development of the Rate of Return Guidelines - WA Treasury Corporation
Adobe PDF 586 kB
19-Nov-13
Public submission - development of the Rate of Return Guidelines - Dampier Bunbury Pipeline
Adobe PDF 493 kB
19-Nov-13
Public submission - development of the Rate of Return Guidelines - ATCO Gas Australia
Adobe PDF 301 kB
19-Nov-13
Public submission - development of the Rate of Return Guidelines - United Energy and Multinet Gas
Adobe PDF 74 kB
6-Nov-13 Supplementary Letter and Materials  - Energy Networks Association
Adobe PDF 101 kB
Appendix A - ENA Response to Draft AER Rate of Return Guidelines
Adobe PDF1.3 MB
Appendix B - ENA - Awarding of Nobel Prize to Eugene Fama for Asset Pricing  Adobe PDF 41 kB 
Appendix C - Nobel Prize Background Paper Understanding Asset Prices  Adobe PDF 898 kB 
Appendix D - Jonesday External Memorandum - Envestra Case  Adobe PDF 219 kB 
Attachment 1 - NERA Report - Fama-French Model  Adobe PDF 725 kB
Attachment 2 - SFG Report - Reconciliation of DDM estimates  Adobe PDF 922 kB
Attachment 3 - NERA Report - The Market Risk Premium  Adobe PDF 770 kB
Attachment 4 - NERA Report - Imputation Credits and Equity Prices  Adobe PDF 667 kB
Attachment 5 - SFG Report - Using Market Data to Estimate Value of Distributed Credits
Adobe PDF 306 kB
Attachment 6 - Hathaway Capital Research - Imputation Credit Redemption ATO Data
Adobe PDF 3 MB 
Attachment 7 - PWC Letter - Response to Criticism of CEG-PWC Report Adobe PDF351 kB 
Attachment 9 - CEG Report - Mechanistic Cost of Debt Extrapolation
Adobe PDF474 kB 
Attachment 10 - CEG Report - Review of Lally and Chairmont Reports  Adobe PDF 357 kB
7-Oct-13 Public Submission - DBP - Draft Rate of Return Guidelines
Adobe PDF 1.9 MB
ACIL-Allen Efficiency Study
Adobe PDF 855 kB
SFG BETA Study Adobe PDF 812 kB
CEG BETA Study
Adobe PDF 710 kB
CEG Credit Risk Study
Adobe PDF 594 kB
7-Oct-13 United Energy and Multinet Gas - Review of Competition Economist's Group Report Estimating the debt risk premium
Adobe PDF 627 kB
United Energy and Multinet Gas - ESQUANT Statistical Consulting Report
Adobe PDF 1.5 MB
United Energy and Multinet Gas - Capital Research Report
Adobe PDF 2 MB
7-Oct-13 Public Submission - Western Australian Treasury Corporation (WATC) - Draft Rate of Return Guidelines
Adobe PDF 890 kB
7-Oct-13 Public Submission - Water Corporation - Draft Rate of Return Guidelines
Adobe PDF 252 kB 
7-Oct-13 Public Submission - Goldfields Gas Transmission (GGT) - Draft Rate of Return Guidelines
Adobe PDF 2 MB
7-Oct-13 Public Submission - DUET Group - Draft Rate of Return Guidelines
Adobe PDF 1.2 MB
7-Oct-13 Public Submission - Australian Pipeline Industry Association (APIA) - Draft Rate of Return Guidelines
Adobe PDF 433 kB
7-Oct-13 Public Submission - ATCO Gas Australia - Draft Rate of Return Guidelines
Adobe PDF 1.9 MB
7-Oct-13 Public Submission - APA Group - Draft Rate of Return Guidelines
Adobe PDF 4 MB
7-Oct-13 Public Submission - Energy Networks Association - Draft Rate of Return Guidelines
Adobe PDF 972 kB
Review of Cost of Equity Models
Adobe PDF 1 MB
Estimates of the Zero-Beta Premium
Adobe PDF 1 MB
Dividend discount model estimates of the cost of equity
Adobe PDF 1 MB
Evidence on the required return on equity from independent expert reports
Adobe PDF 827 kB
Estimating the return on the market
Adobe PDF 770 kB
Estimating E[Rm]: in the context of recent regulatory debate
Adobe PDF 2 MB
Regression-based estimates of risk parameters for the benchmark firm
Adobe PDF 446 kB
The Vasicek adjustment to beta estimates in the Capital Asset Pricing Model
Adobe PDF 343 kB
Information on equity beta from US companies
Adobe PDF 1.9 MB
Comparison of OLS and LAD regression techniques for estimating beta
Adobe PDF 298 kB
Assessing the reliability of regression-based estimates of risk
Adobe PDF 414 kB
The Payout Ratio
Adobe PDF 668 kB
Updated dividend drop-off estimate of theta
Adobe PDF 544 kB 
Term of the risk free rate for the cost of equity
Adobe PDF 1 MB
The Market, Size and Value Premiums
Adobe PDF 1 MB
Credit Ratings for Regulated Energy Network Services Businesses
Adobe PDF 844 kB
Debt strategies of utility businesses
Adobe PDF 1 MB
Estimating the debt risk premium
Adobe PDF 3 MB
Energy Networks Association: Debt financing costs
Adobe PDF 497 kB
Energy Networks Association: Benchmark term of debt assumption
Adobe PDF 385 kB
Energy Networks Association: Potential impact of the ERA’s DRP methodology
Adobe PDF 537 kB
1-Aug-13 Public Submission - Western Australian Treasury Corporation - Cost of Debt working paper
Adobe PDF 266 kB
1-Aug-13 Public Submission - DBNGP (WA) Transmission Pty Limited - Cost of Debt working paper
Adobe PDF 429 kB
1-Aug-13 Public Submission - APA Group - Cost of Debt working paper
Adobe PDF 113 kB
1-Aug-13 Public Submission - Goldfields Gas Transmission Pty Ltd - Cost of Debt working paper
Adobe PDF 4 MB
21-Mar-13 Public Submission - WA Treasury Corporation
Adobe PDF 2.4 MB
13-Mar-13 Public Submission - Western Australian Major Energy Users Group
Adobe PDF 373 kB
13-Mar-13 Public Submission - Energy Networks Association (ENA)
Adobe PDF 208 kB
13-Mar-13 Public Submission - Wesfarmers Chemicals, Energy & Fertilisers
Adobe PDF 3.7 MB
13-Mar-13 Public Submission - The Australian Pipeline Industry Association (APIA)
Adobe PDF 3.1 MB
13-Mar-13 Public Submission - ATCO Gas Australia
Adobe PDF 1.9 MB
13-Mar-13 Public Submission - United Energy and Multinet Gas
Adobe PDF 1 MB
13-Mar-13 Public Submission - Goldfields Gas Transmission Pty Ltd
Adobe PDF 5.1 MB
13-Mar-13 Public Submission - APA Group
Adobe PDF 113 kB
13-Mar-13 Public Submission - United Energy and Multinet Gas
Adobe PDF 300 kB
13-Mar-13 Public Submission - DBP
Adobe PDF 6.04 MB